CALIFORNIA CLASS ACTION LAW

Category: Arbitrability

“Good, Bad, or Ugly”: U.S. Supreme Court Upholds Arbitrator’s Interpretation of Contract as Providing for Class Arbitration

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A unanimous U.S. Supreme Court today affirmed an arbitrator’s interpretation of an arbitration clause to permit class proceedings.  Oxford Health Plans LLC v. Sutter, No. 12-135, 569 U.S. __ (June 10, 2013).  The question presented was whether an arbitrator, who found that the parties’ contract provided for class arbitration, “exceeded [his] powers” under §10(a)(4) of the Federal Arbitration Act, 9 U. S. C. §1 et seq.  Delivering the opinion of the Court and citing Stolt-Nielsen S. A. v. AnimalFeeds Int’l Corp., 559 U. S. 662, 684 (2010), Justice Kagan concluded that the arbitrator’s decision survives the limited judicial review §10(a)(4) allows.

The arbitration clause at issue provided as follows:

No civil action concerning any dispute arising under this Agreement shall be instituted before any court, and all such disputes shall be submitted to final and binding arbitration in New Jersey, pursuant to the rules of the American Arbitration Association with one arbitrator.

Slip Op. at 2.

The state court granted Oxford’s motion to compel arbitration, and the parties agreed that the arbitrator should decide whether their contract authorized class arbitration.  Id.  The arbitrator determined that it did. Id.  Oxford filed a motion in federal court to vacate the arbitrator’s decision on the ground that he had exceeded his powers under §10(a)(4), but the District Court denied the motion, and the Third Circuit affirmed.  Id.

While the arbitration proceeded, the Supreme Court Court held in Stolt-Nielsen that “a party may not be compelled under the FAA to submit to class arbitration unless there is a contractual basis for concluding that the party agreed to do so.” 559 U. S. at 684. The parties in Stolt-Nielsen had stipulated that they had never reached an agreement on class arbitration.

The Supreme Court in Oxford Health Plans LLC distinguished Stolt-Nielsen: Read the rest of this entry »

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Broad “Any Disputes” Language in Arbitration Agreement Insufficient to Manifest Clear and Unmistakable Intent to Delegate Threshold Arbitrability Determination to Arbitrators

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Editorial note:  The author of California Class Action Law appeared for respondent Ajamian in the opinion summarized below, Ajamian v. CantorCO2e, L.P., et al.  

In an opinion certified for publication, the First District Court of Appeal held that a broadly worded arbitration agreement that stated that “[a]ny disputes, differences or controversies arising under” a contract shall be settled by a panel of arbitrators was insufficient to establish “clear and unmistakable” evidence of an intent to delegate issues of enforceability or arbitrability to the arbitration panel.  Ajamian v. CantorCO2e, L.P., et al., No. A131025 (1st Dist., Div. 5 Feb. 6, 2012) (available at http://www.courtinfo.ca.gov/opinions/documents/A131025.PDF).

Although the arbitration provision was broadly worded and indicated that arbitration might be conducted under the rules of an arbitration service that gives arbitrators the power to decide the validity of arbitration agreements, it did not provide clear and unmistakable evidence that the parties intended to delegate authority to the arbitrator, rather than to the court, to decide the threshold issue of whether the arbitration provision itself was unconscionable.

Id.

Background

Plaintiff Ajamian filed a complaint against Defendants CantorCO2e and Margolis, asserting claims under the California’s Fair Employment and Housing Act, the California Labor Code, and other theories.  Id.  Defendants filed a petition to compel arbitration pursuant to the terms of a written employment agreement or, alternatively, an employee handbook.  Id.

The arbitration provision of the employment agreement read: Read the rest of this entry »

Ninth Circuit Holds That “Crux of Complaint” Rule Allows Courts to Decide Arbitrability Even Where Plaintiff Fails to Raise Challenge to Arbitrability as a Distinct Claim in Complaint

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The Ninth Circuit Court of Appeals considered whether the “crux of the complaint” rule requires the question of arbitrability to be determined by the arbitrator when a plaintiff’s challenge to the arbitration clause does not appear in his complaint.  Bridge Fund Capital Corporation v. Fastbucks Franchise Corporation, No. 08-17071, 2010 WL 3584060 (9th Cir. Sept. 16, 2010).  The court held that “as long as the plaintiff’s challenge to the validity of an arbitration clause is a distinct question from the validity of the contract as a whole, the question of arbitrability is for the court to decide regardless of whether the specific challenge to the arbitration clause is raised as a distinct claim in the complaint.”  Id. *1. Read the rest of this entry »